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Manhattan Associates Is Still Delivering the Goods

Record results for the supply chain management technology company have become par for the course.

Some companies simply find ways to exceed expectations quarter in and quarter out. In an industry that relies on getting things were they're needed as effectively as possible, Manhattan Associates (NASDAQ:MANH) has done an exceptionally good job of giving customers the supply chain management tools they need in order to maximize their productivity.

Coming into Manhattan Associates' second-quarter financial report on Tuesday afternoon, investors had hoped that the company would be able to sustain its string of strong growth in revenue and earnings, and the results more than lived up to those expectations. Let's look more closely at the latest from Manhattan Associates and what its performance says about its future.

Another record quarter for Manhattan AssociatesFor those who've followed Manhattan Associates for a while, it should come as no surprise to see the company hit another high-water mark in its top- and bottom-line performance. Revenue climbed more than 13% to $142.3 million, which was more than $1 million higher than the consensus forecast among investors in the stock. Net income jumped by nearly a quarter to $27.9 million, and after allowing for the impact of equity-based compensation, adjusted earnings of $0.42 per share were $0.06 higher than most had expected.

Digging into Manhattan Associates' results, the supply chain technology company fared well in just about all of its business divisions. The key services segment once again powered the company forward with revenue gains of 14%, as gains in both professional services as well as customer support and software enhancements drove overall growth for the company. Hardware-related and other revenue sources climbed at a 5% rate, but a 13% rise in license revenue had an even bigger impact on the bottom line, as the high-margin segment gives Manhattan Associates a greater ability to see higher sales fall through to boost net income.

As we've seen in past quarters, Manhattan Associates saw its sales teams perform extremely well. The company brought in four contracts with recognized licensing revenue of $1 million or more, and new customers like outdoors apparel specialist L.L. Bean combined with broadening relationships with existing customers like New Balance Athletics and Brooks Brothers to create some big wins.

CEO Eddie Capel rolled out similar comments to what investors have seen in past quarters, praising Manhattan Associates' ability to grow its omni-channel, store and distribution management solutions business. "We're very pleased with our third quarter performance," Capel said, and "our outlook for the balance of 2015 and the future is quite positive."

What's ahead for Manhattan Associates?Manhattan Associates expressed just how positive its views of its future are by boosting its guidance for the full 2015 year. The company repeated its past guidance for revenue growth of between 12% and 13%, which will work out to sales of between $553 million and $558 million. Yet Manhattan Associates did boost its earnings guidance, increasing GAAP estimates by a nickel per share and adjusted earnings by $0.07 per share. The company now expects to earn between $1.47 and $1.49 on an adjusted basis, representing an even more impressive growth rate of 27% to 28%.

Once again, though, Manhattan Associates has had difficulty building success away from its core geographical center in the Americas. Revenue from the Asia-Pacific region once again fell year over year, with operating income falling by more than half. The Europe/Middle East/Africa segment fared better, with an 18% rise in revenue and a jump of more than 60% in adjusted operating income. Yet international sales overall still represent only about 15% of the company's revenue, and investors will need to see a faster ramp-up in global results in order to be convinced that Manhattan Associates has a real future overseas.

Overall, the results from Manhattan Associates seemed to satisfy investors, as the stock climbed about 2% in the first 45 minutes of after-market trading following the announcement. The upward momentum in the share price has worried some investors that a pullback might be imminent, but with the ability to keep generating record results, Manhattan Associates seems poised to keep growing. As long as it can keep exceeding the lofty expectations that investors have for the company, Manhattan Associates should still keep pleasing investors with its fundamental business strength.

Author

Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.
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